your community energy company Madison Gas and Electric Company Environmental Responsibility Report

Transcription

1 your community energy company Madison Gas and Electric Company Environmental Responsibility Report 2012

2 Table of contents 3 Executive summary 4 Achieving Green Tier status 6 Producing sustainable results 8 Reducing emissions 10 Addressing climate change 12 Protecting our water 14 Demonstrating new technologies 16 Engaging our customers 18 Serving our communities Back cover: MGE Green Team Leaders U.S. Department of Energy Acknowledgement and Disclaimer: Acknowledgement: References in this 2012 MGE Environmental Responsibility Report to electric vehicle charging stations covers material based upon work supported by the Department of Energy award number DE- DE Disclaimer: This report was prepared in part as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. Madison Gas and Electric (MGE) generates and distributes electricity to 139,000 customers in Dane County and purchases and distributes natural gas to 144,000 customers in seven south-central and western Wisconsin counties. MGE is a regulated utility and the main subsidiary of MGE Energy. MGE s roots in the Madison area date back more than 150 years. Location 133 S. Blair St. Madison, WI Mailing address PO Box 1231 Madison, WI MGE Environmental Affairs environment@mge.com MGE Energy Shareholder Services investor@mgeenergy.com Forward-looking statements: This report includes forward-looking statements and estimates of future performance that may differ from actual results because of uncertainties and risks encountered in day-to-day business. 2

3 Executive summary MGE is dedicated to the communities and the customers we serve. That means doing our part to ensure a sustainable future. Each day, we strive to go above and beyond in our efforts to balance the need for reliable, affordable energy with our commitment to be responsible environmental stewards. Whether we are engaged in dayto-day activities or planning for tomorrow s energy challenges, we are committed to continually improving our environmental performance. Green Tier MGE is the first utility in the state to join the Department of Natural Resources Green Tier program at the highest level called Tier 2. We received the designation in October This voluntary program recognizes performance that exceeds requirements related to health, safety and environment. MGE is only the fifth company in Wisconsin to achieve Tier 2 status. Tier 2 is designed for companies with a history of superior environmental performance. At MGE, we have a strong tradition of environmental stewardship. That tradition includes: Earning the Green Power Program of the Year award from the Department of Energy and the Environmental Protection Agency for expanding our green energy program. Gary J. Wolter Chairman, President and Chief Executive Officer MGE Energy and MGE Discontinuing coal use at our Blount Generating Station in Madison. Under Green Tier, we will build on past success with a focus on reducing emissions and waste, and diversifying our renewable energy portfolio. Participating in Green Tier reinforces our commitment to our communities and to excellent environmental performance. In the program, we also will continue to work with others in innovative partnerships such as: Our Community Environmental Advisory Group. The Dane County Clean Air Coalition. The Yahara Watershed adaptive management pilot program. Our accomplishments, programs and partnerships are highlighted throughout this report. Snapshot of recent actions Manure digester MGE plans to purchase energy from an innovative manure digester run by Dane County. The digester will convert cow manure from local farms into electricity. It also will help clean area lakes by reducing phosphorus. Green Power Tomorrow More than 12,000 customers buy green power from MGE 60% of these customers choose to buy 100% of their energy from renewable sources. MGE s Green Power Tomorrow program historically has been second in the nation among investor-owned utilities for its customer participation rate and for green power sold as a percentage of all electric sales. Columbia Energy Center We are taking the next steps to further control emissions. New controls at the coal-fired Columbia plant are projected to reduce both sulfur dioxide and mercury emissions by 90% when they go online in MGE co-owns Columbia where construction is under way on the emissionreduction equipment. EV charging network MGE s network of 26 charging stations serves electric vehicles in the Madison area. We are monitoring the charging stations to learn how electric vehicle owners use them. 3

4 Achieving Green Tier status In 2012, MGE became the first utility in the state to join the Green Tier environmental leadership program at the Tier 2 level, which is the highest designation given by the Wisconsin Department of Natural Resources (DNR). MGE is only the fifth company in the state to achieve Tier 2 status. MGE participated in the DNR s Environmental Cooperative Agreement (ECA) pilot program for 10 years. This pilot program led to the passage of Wisconsin s Green Tier law. The ECA was a collaborative effort between the DNR and MGE to achieve superior environmental performance at Blount Generating Station. The ECA also set broad environmental goals for MGE. Our success under the ECA has allowed MGE to enter Green Tier at the highest level. MGE is the 1 st utility in Wisconsin to achieve Tier 2 status, the highest program level. MGE received a plaque designating the company as a Green Tier environmental leadership program participant from the Wisconsin Department of Natural Resources. Pictured above are Jeff Jaeckels, MGE Director of Safety and Environmental Affairs; Mark McDermid, DNR Director of Cooperative Environmental Assistance; Kristine Euclide, MGE Vice President and General Counsel; and Gary Wolter, MGE Chairman, President and CEO. Green Tier goals MGE s Green Tier agreement is similar to the ECA. It emphasizes operational flexibility at Blount as well as broader corporate commitments to advance environmental sustainability. In cooperation with the DNR, MGE set five goals for making significant environmental improvements. MGE will: Forge partnerships to encourage environmental stewardship and reduce emissions, including greenhouse gas emissions. Continue maximizing the amount of waste material that can be reused and/or diverted from landfills. Maintain an ISO-certified environmental management system. Promote energy efficiency, renewable resource and emission-reduction technology development and expansion. Increase the availability of renewable energy for customers. Many of MGE s goals are already under way because of the groundwork laid by the ECA. Key projects that will help us achieve our goals are discussed throughout this report. 4

5 MGE and the DNR agreed to a five-year contract under the Tier 2 program. Tier 2 participation Companies participating in Green Tier Level 2 must have a track record of going above and beyond in environmental performance. Companies also must be committed to bringing about change in their industry or region. Tier 2 companies: Are required to have a formal environmental management system in place. (See page 6 for details about MGE s system.) Agree to regular systems and compliance audits. These rigorous inspections help ensure participants are making adequate progress on their goals. MGE s Community Environmental Advisory Group (CEAG) will help ensure MGE s efforts are on track. MGE formed CEAG to work in partnership on environmental management at Blount. MGE s CEAG, which is comprised of representatives from environmental organizations, government, business, the community and the DNR, is one of the longest-running groups of its kind in Wisconsin. For Green Tier updates, visit dnr.wi.gov/topic/greentier. Mercury removal As part of our commitment to reduce mercury, we follow a plan at Blount Generating Station to remove older mercury-control equipment. Since 2005, MGE has recycled 338 pounds of mercury-containing equipment. Under Green Tier, MGE will continue its mercuryremoval efforts and regularly track results. Thermostat recycling In other efforts to reduce mercury, MGE maintains a voluntary mercury thermostat recycling program. Customers, building contractors and others can bring mercury-containing thermostats to MGE for recycling at no charge. MGE has increased solar power capacity in the Madison area. 5

6 Producing sustainable results MGE takes action to produce sustainable environmental improvement over time. Through goal setting and governance, we work to incorporate environmental considerations into our daily decision-making. Environmental accountability is part of our culture. Environmental Management System MGE s ISO Environmental Management System (EMS) at Blount Generating Station is a voluntary framework used to enhance our environmental performance. Blount is the first power plant in Wisconsin to be ISO certified. The EMS builds environmental accountability into daily operations at Blount by establishing annual goals and measuring performance with third-party environmental audits. Audit results are thoroughly reviewed by senior management. Our most recent audit, conducted in 2012, found that Blount met all of its performance standards. The audit report noted MGE personnel have a thorough working knowledge of applicable regulatory requirements and place a priority on environmental compliance. Facility improvements The company continues a major effort to improve energy efficiency throughout its facilities. Projects range from replacing building automation systems to upgrading lighting and overhauling ice-making heat pumps. Other recent energy-saving improvements include: Converting pneumatic controls to direct digital controls so that processes and equipment, like HVAC, can be controlled automatically by computer. Replacing 25 traditional thermostats with smart thermostats that are controlled through a network. Installing supplemental cooling to help reduce use of the main cooling system during off hours. Many of these projects are recently completed or under way. MGE will monitor performance and track energy savings over time. Transportation fleet MGE continues to green up its operations with changes to its vehicle fleet: Two hybrid electric distribution trucks. Typical bucket trucks require power from an idling engine to operate an aerial lift. With MGE s hybrid trucks, an electric component operates the aerial lift bucket. A vehicle that can operate its bucket mechanism without idling wastes no fuel and emits no pollutants while working. Two electric vehicles a Nissan Leaf and a plug-in hybrid Toyota Prius which are part of our larger commitment to an EV future. (See page 14.) A small electric vehicle with a half-ton hauling capacity used daily by our Facilities Department. It can travel up to 40 miles between charges. A variety of hybrid vehicles, including a hybrid truck used for power plant maintenance. MGE began testing commercially available hybrid electric vehicles for fleet operations in They are used for meter reading and other light-duty functions. MGE also tests alternative-fueled vehicles, including compressed natural gas and biodiesel. Today, about 50 trucks and off-road pieces of equipment are powered by ultra-low sulfur biodiesel. This reduces air emissions and reliance on imported oil. MGE s hybrid bucket trucks rely on an electric component to operate the aerial lift rather than depending on an idling truck engine. 6

7 Clean Air Coalition MGE is a founding member of the Dane County Clean Air Coalition. This partnership of businesses, schools and government agencies works to improve air quality in Dane County. Since 2003, the coalition has created several voluntary programs to ensure Dane County meets federal air standards. MGE and its employees participate in these county programs. Transportation, energy consumption and other daily activities can have a significant effect on air quality. The Dane County Clean Air Coalition asks public institutions, private businesses and residents to take: Overall pollution-reduction measures. Stepped-up measures on Clean Air Action Days when higher levels of air emissions are expected. MGE has committed to a variety of operational measures especially on Clean Air Action Days. For example, on action days we reduce operational vehicle use whenever possible, and we curtail painting projects because the volatile organic compounds in paint contribute to ground-level ozone. Many of our employees pitch in by carpooling and using alternative transportation to get to work. Green Team At MGE, every employee is a member of the MGE Green Team. Employees are trained in how their individual actions at work can improve our environment. MGE s Green Team Leaders represent departments across the company. Working with our Environmental Affairs Department, Green Team Leaders ensure compliance with regulations and our EMS. Recent achievements include: Implementing an alkaline battery recycling program. Since the program began, MGE employees have recycled more than 460 pounds of alkaline batteries. Although alkalines no longer contain mercury, materials in these batteries can be reused. Leading efforts to update MGE s long-standing recycling plan for employees and moving to an All-In-One recycling plan facility-wide. Developing databases to more efficiently track erosion control and archeological permitting processes. (See page 13.) Employees pedal for environment and fitness MGE encourages employees to consider bike riding as an alternative form of transportation. The MGE Wellness Committee promotes biking as a way to stay fit. The goal is to encourage people to ride their bikes for commuting or recreation. Bike riding: Reduces emissions. Burns calories. Saves money on fuel. For employees, MGE has hosted bike commuting lunch-n-learn events, alternative transportation challenges and supported MGE teams in bike events like the MS Best Dam Bike Ride and Wisconsin s Bike Challenge. We also sponsor popular city and community events such as Ride the Drive, Bike to Work Week and Bike for Boys and Girls Club. 7

8 Reducing emissions MGE meets all current, applicable environmental regulations and often goes beyond what is required. We are reducing air emissions by installing new emission-reduction technology, improving equipment efficiencies and diversifying our generation mix. Our Energy 2015 plan guides our efforts. Energy 2015 is a voluntary, 10-year plan we announced in 2006 that details our goals for a cleaner, more efficient energy supply. MGE met all of its Energy 2015 goals ahead of schedule. Milestones include: Discontinuing coal at Blount Generating Station. Investing in the new cleaner coal Elm Road Generating Station. Increasing our wind energy capacity. Modernizing our generation fleet We have made great strides in modernizing our fleet of power plants to reduce air emissions and improve efficiency. From 2005 through 2011, MGE spent approximately $348 million on new generation. These investments have increased generation capacity by 43% while at the same time decreasing emissions by approximately 50% for both nitrogen oxides and sulfur dioxide. Our new investments include: The natural gas-fired West A decade of major generation improvements Year Facility Improvements and capacity 2005 West Campus Cogeneration MGE completed a new natural Madison, Wis. gas-fired plant. Added 150 MW of capacity Top of Iowa Wind Farm MGE completed a new wind farm. Worth County, Iowa Added 30 MW of capacity Elm Road Station We Energies completed a new Oak Creek, Wis. cleaner coal plant. MGE owns 8.3% a 100 MW share Blount Generating Station MGE switched to natural gas from Madison, Wis. coal. 100 MW of capacity Columbia Energy Center Alliant is constructing new air Portage, Wis. emission controls. MGE owns 22% a 220 MW share. MGE continues to modernize its generation fleet. These improvements encompass nearly all the major generation facilities that MGE owns or co-owns with other utilities. The remaining units in MGE s generation fleet include the 11-MW Kewaunee Wind Farm, an 83-MW combustion turbine, various solar units and smaller combustion turbines. Campus Cogeneration Facility (WCCF) in Madison (150 megawatts {MW} in 2005.) The Top of Iowa wind farm (30 MW in 2008.) The Elm Road Generating Station (100 MW in 2011.) This world-class, cleaner coal facility has state-ofthe-art technology to greatly reduce emissions compared to a standard coal-fired plant. MGE also has focused on existing generation facilities: In 2011, Blount Generating Station discontinued coal use. We retired the older, least efficient units at Blount, which represent about 90 MW of capacity. The remaining capacity switched permanently to natural gas. At the Columbia Energy Center, the next major project is under way. Additional emissionreduction equipment is being constructed. MGE owns 22% of this coalfired facility. MGE is investing approximately $140 million toward 8

9 the total project costs of more than $600 million. Once the new controls begin operation in 2014, they are projected to reduce both sulfur dioxide and mercury emissions by 90%. As an additional benefit, the new equipment will decrease particulate matter. Renewable energy MGE has been growing its portfolio of renewable energy. In 2011, our renewable energy sales as a percentage of total retail electricity sold were more than 12%. This makes MGE a leader among other investorowned utilities in Wisconsin. MGE has: 137 MW of wind energy capacity up from 11 MW in MW of solar energy capacity up from 22 kilowatts in In addition, MGE purchased 31 million kilowatt-hours (kwh) of electricity from landfill gas in 2011 a 34% increase from MGE has committed to purchase electricity from a new manure digester scheduled to come online in This digester will generate about 11 million kwh annually. (See page 10.) TRI reporting The U.S. Environmental Protection Agency (EPA) maintains a database showing the amount of chemicals released into the air, land or water by industries and utilities. MGE annually reports chemicals produced by our WCCF and Blount power plants to the EPA s public Toxic Release Inventory database. We reduced the reportable chemical emissions at Blount to zero by switching the plant from coal to natural gas in The only chemical that WCCF emits is ammonia, which equaled 9,181 pounds in We do not have reporting responsibility for plants that we co-own but do not operate. Meeting regulations Federal and state air emission regulations are evolving. While MGE meets all current applicable regulations, the company also closely follows new rules and developments and uses environmental risk analysis to plan for the future. An Environmental Management System process assists us in identifying and tracking regulations to ensure compliance with measuring and reporting requirements. By taking a proactive approach, MGE is well positioned to respond to future regulations. Emission rates (lbs./mwh) Nitrogen oxides Particulate matter Mercury Sulfur dioxide The Environmental Agency Emission rates from MGE s owned generation assets as they came online, adjusted for MGE s share of jointly owned units. MGE co-owns the generation at We Energies Elm Road Generating Station and Alliant Energy s Columbia Energy Center. 9

10 Addressing climate change Future federal regulations regarding greenhouse gases (GHGs) remain uncertain. Nonetheless, MGE is voluntarily reducing GHG emissions and minimizing their impacts. In addition, we work with customers who want to reduce their individual carbon footprints. MGE is committed to meet customers energy needs while reducing emissions, including the two most significant GHGs carbon dioxide (CO2) and methane. Carbon reductions Our Energy 2015 plan has multiple strategies to reduce GHGs, such as Projected CO2 emission rates actual (lbs./kwh) projected a diversified and more efficient generation mix, energy efficiency and renewable energy. Our aggressive implementation of Energy 2015 will help MGE achieve a projected: 17% decrease in CO2 rates from 2005 to % decrease in total CO2 emissions. Methane combustion MGE also is reducing GHG impacts with initiatives that generate electricity from the combustion of methane energy produced locally in landfills and cow manure. As a GHG, methane is at least 20 times Projected CO2 emissions (million tons) Carbon dioxide (CO2) emissions are calculated from generating units owned by MGE, power purchase agreements and power projected to be purchased by MGE on the regional Midwest ISO market from unspecified sources. The market purchase emission rate is based on a seven-state regional average CO2 emission profile from all power produced in Wisconsin and the surrounding Midwest states actual projected more potent than CO2. During the combustion process, the methane becomes CO2 reducing its potency. Generating electricity also puts methane to good use as a fuel. Landfill gas: MGE purchases electricity generated from methane at a Dane County landfill. Since 2001, MGE has nearly tripled its use of electricity from this local resource. In 2011, MGE purchased 31 million kilowatt-hours (kwh), which can power 4,800 homes for a year. Manure digester: MGE is partnering with Dane County on an innovative manure digester. The manure digester will generate about 11 million kwh annually, which can power approximately 1,600 homes. The project is made possible with the support of MGE. MGE will purchase the electricity from Dane County at a cost of more than $1 million annually. This price is well above current market prices for electricity. However, we believe it is appropriate to financially assist this digester project because it will produce additional environmental benefits for the community. The digester will reduce phosphorus in area lakes. (See page 13.) 10

11 GHG reporting Under a new Environmental Protection Agency (EPA) requirement, MGE monitors, measures and reports several GHG emissions annually. The tracking covers power plant emissions and smaller combustion sources such as small engines. We also monitor and report GHG emissions from natural gas distribution to customers. Planning and analysis Although GHG emissions are not currently regulated, MGE, nevertheless, applies the same careful approach and environmental risk analysis to possible future sources of GHGs that the company uses for other regulated emissions. When making generation decisions, MGE s economic analysis explicitly includes a possible projected carbon surcharge to help ensure its decisions are financially sound whether or not CO2 is regulated in the future. Wisconsin has a strong regulatory system that helps protect customers and utility investors. The Public Service Commission of Wisconsin makes a thorough, independent review of all investment decisions by the state s utilities. MGE s response to any future GHG regulations and costs will fall under the purview of the commission. Voluntary actions, national recognition Community reduces CO2 emissions In 2007, the Mpower Partners program was formed in Madison. This sustainability organization set a community-wide goal for Madison reduce carbon emissions by 100,000 tons by MGE, a founding partner in the Mpower program, worked with the city and its residents to encourage green power and energy efficiency efforts. In January 2011, the City of Madison announced the local sustainability efforts paid off with a total reduction of 324,443 tons of carbon. The success was from the collective efforts of the city, University of Wisconsin-Madison, residents and businesses. As a result, the EPA named Madison a Climate Showcase City. The award recognizes local businesses that help reduce carbon impacts. More than 70 projects were completed in 2011 by businesses ranging from a large insurance company to the Madison Mallards baseball franchise. CO2gether.org MGE helps customers reduce their carbon impacts and save energy with an innovative website called CO2gether.org. This specially created site allows our customers and others to measure, track and manage the CO2 emitted from their energy use including transportation. The website, launched in 2007, is a popular resource. Through the website, customers can collaborate and learn from each other. The website was developed by MGE, 1000 Friends of Wisconsin and the UW-Madison Center for Sustainability and the Global Environment. Paw of Approval MGE received a Paw of Approval Award for practicing environmental leadership. Polar Bears International, a nonprofit polar bear conservation group, presents this award to businesses that introduce initiatives to conserve energy and reduce GHG emissions. The award recognizes MGE s environmental commitment, which extends into the community. The Dane County Henry Vilas Zoo nominated MGE for this award because of our efforts to reduce carbon dioxide through green energy and energy efficiencies. 11

12 Protecting our water At MGE, we are committed to go beyond regulations to protect one of our region s most important assets our local lakes, rivers and streams. Most recently, we have joined the new local Yahara WINs (watershed improvement network) to reduce local phosphorus sources. This new commitment builds on the steps we already have taken to reduce phosphorus and other pollutants. Yahara WINs MGE is working with the Madison Metropolitan Sewerage District, Dane County, municipalities and other partners to implement a groundbreaking phosphorus reduction effort in the Yahara River watershed. Yahara WINs is a four-year pilot program aimed at reducing the algae-forming phosphorus pollution that enters our lakes and waterways. This pollution negatively impacts public health, property values and recreation. More traditional efforts to reduce phosphorus have met with limited success because they largely focused on point sources, such as sewerage treatment and power plants. These efforts did little to address the phosphorus discharge coming from nonpoint sources, such as the agricultural and urban runoff feeding into Lake Mendota and the Yahara River watershed. Yahara WINs will use an adaptive management approach to focus on phosphorus pollution from the largest nonpoint source contributors such as farms, construction sites and urban runoff. Yahara WINs is exploring practices such as winter crop cover, soil stabilization and other cost-effective ways to reduce runoff. This innovative phosphorus-control program is one of the most flexible and affordable approaches nationwide. Dewatering practices Some underground utility construction work must be performed in dry conditions. In those cases, MGE removes and discharges accumulated water from utility vaults and manholes into nearby storm drainage systems. These so-called dewatering operations are regulated because storm drainage systems directly convey water to natural water bodies without any treatment. Untreated water from vaults and manholes may contain sediment. To meet water quality standards and help protect our water system, MGE researched filtration options and follows best practices for vault dewatering. Smart snow handling When MGE discontinued burning coal in 2011 at Blount Generating Station, the coal yard became available space. MGE now uses this area for snow handling. The benefit of using the coal yard for snow handling is that it allows MGE to control the melt water. The coal yard runoff goes through a wastewater treatment system, which helps prevent sediment from being washed into the storm sewers and lakes. When removing water from utility vaults and manholes, MGE uses an endof-hose filter. This multi-layered fabric bag features progressively smaller pore sizes to effectively remove sediment from water prior to discharge. Using Blount for snow handling also cuts down on air emissions. The distance from where snow is hauled to Blount is much closer than the previous storage site reducing miles traveled. 12

13 Stormwater filtration MGE s parking lot is home to an innovative stormwater filtration system that tests the efficiency of various filters to clean stormwater before it drains into Lake Monona. The U.S. Geological Survey monitored the system and recorded pollution reductions: Petroleum compounds, 48%. Sediment, 39%. Phosphorus, 36%. Solids, 32%. Copper, 23%. Zinc, 8%. One of the first installations of its kind in the state, MGE s stormwater filtration system features replaceable cartridges in a concrete vault that trap litter and sediment particles, filter out pollutants and collect the treated water for discharge. Erosion control MGE is committed to implementing proper erosion-control measures at all work sites. We recently updated our erosion-control program to enhance its efficiency and effectiveness. Program updates include implementing a variety of best practices specific to land features and water conveyances to minimize the likelihood of soil being washed out of a site. Additionally, MGE instituted an improved inspection process and developed a database to gather and store performance data beyond what is required. This information can be readily accessed to help us effectively manage erosion-control strategies over time. MGE is regulated by 37 municipalities in Dane County for erosion control at electric and natural gas construction sites. Many communities and the state also have permit and inspection requirements. MGE s updated erosion-control program helps ensure MGE meets or exceeds requirements. Clean Lakes Alliance MGE supports the Clean Lakes Alliance (CLA), a nonprofit organization devoted to improving the water quality of the lakes, streams and wetlands of the Yahara River Watershed. CLA is a strong partnership of citizens, businesses and government agencies. As a community energy company, we believe these strong local partnerships are critical to reducing phosphorus and improving water quality. Cow power = cleaner lakes MGE will help clean area lakes through its support of a new innovative manure digester, which will remove phosphorus. The company will support this anaerobic digester operated by Dane County by purchasing energy at a premium rate. The digester, located on a farm in the town of Springfield, will convert cow manure from local farms into electricity. Construction is planned for late Currently, most phosphorus from these farms discharges to the Yahara Watershed contributing to green algae and other weed growth. MGE believes it is important to support the digester to benefit area lakes. This locally produced energy will reduce phosphorus runoff into local waterways and improve water quality. 13

14 Demonstrating new technologies MGE continues to explore and test new technologies to learn how they can help meet customers energy needs. Since 2000, we have launched more than 30 technology demonstration projects throughout our community. Recent demonstrations Micro-combined heat and power (micro-chp): MGE recently installed a micro-chp unit in the mechanical room of the aviary at the Henry Vilas Zoo. This emerging technology uses a natural gas-fired engine to produce heat and electricity simultaneously. The micro-chp runs 24/7 providing heat to the aviary. This decreases demand on the building s existing heating system. The micro-chp unit at the Henry Vilas Zoo is about the size of a domestic boiler. In addition to heating the aviary, the cogeneration system will produce about 36,000 kwh of electricity annually. MGE s 26 public charging stations for electric vehicles are powered by our wind resources in Wisconsin and Iowa. At the same time, the engine turns an alternator to generate electricity. The electricity produced is then added to MGE s community energy grid. The micro-chp system at the zoo is the first of its kind in Dane County. MGE owns and operates the highly efficient unit. Electric vehicle charging network: MGE installed a network of 26 electric vehiclecharging stations in the Madison area. This is the largest network in Wisconsin and one of the largest of any Midwestern city. MGE is monitoring the charging stations to learn how electric vehicle owners use them. The project is partially funded by a U.S. Department of Energy (DOE) grant. The benefits of a plug-in electric vehicle (PEV) include lower fuel costs and lower emissions. According to the DOE: A PEV costs 3 to 5 cents per mile in electric mode. A gasoline car with a fuel economy of 27.5 mpg costs about 14 cents per mile. All-electric vehicles produce zero direct (tailpipe) emissions and low life-cycle emissions (assembly line through all the maintenance and operation of car). If electricity is generated from nonpolluting, renewable sources, PEVs have the potential to produce close to zero life- cycle emissions. Recognizing customers growing interest in PEVs, MGE spearheaded efforts to prepare for this alternative transportation technology. We are actively studying and planning for the transition to vehicles that plug in rather than gas up. Our research helps us educate customers and successfully manage this new technology. 14

15 Flower power: MGE has more than 25 solar demonstration projects in the Madison area. Most recently, Madison s Olbrich Gardens is home to a 20-foot-tall solar photovoltaic installation with triangularshaped modules that form a flower. Although the design is unique, the triangular panels are equipped to do their job collect sunlight that can be converted to electricity. MGE owns and maintains this system. Live data reporting is available at mge.com/solar for MGE s solar demonstration projects, including the one at Olbrich. Ground source heating: Ground source heat pumps are a complex, still-evolving technology. MGE is learning firsthand about this type of heating and cooling system through a demonstration project the company installed at the Lussier Community Education Center in Madison. Ground source heat pumps use the earth s natural heat to assist with the heating and cooling of buildings. Most equipment for this type of system is located underground. An inside monitoring system provides periodic data to track performance. Through installing and operating the system, MGE is gaining knowledge to help customers make decisions about technologies to meet their heating and cooling needs. MGE s solar display at Olbrich Botanical Gardens is located near the parking lot in a sunny area of 16 acres of outdoor gardens. Additional demonstration projects Other technology demonstrations include: Opportunities to cut emissions generated by diesel engines. MGE retrofitted engines with particulate matter traps to study the effectiveness and cost of this technology. The use of natural gas blended with diesel fuel to run diesel engines, thereby offering users an opportunity to switch fuels based on cost or availability. Through this demonstration, MGE learned that natural gas can be used to significantly reduce the amount of diesel fuel needed to operate diesel engines. Options for generating power from alternative, renewable, sugar-based fuels. The potential viability of using switchgrass as electricity generation fuel and for carbon sequestration. 15

16 Engaging our customers MGE makes it a priority to provide customers with the tools they need to make wise choices about their energy use. We also connect customers with programs and resources that can help them conserve energy, protect the environment and cut costs. Renewable energy programs MGE is an industry leader in renewable energy. Green Power Tomorrow: MGE works with customers to reduce their environmental footprints. Our Green Power Tomorrow (GPT) program is one way customers are making a difference. Launched in 1999, the program quickly sold out. MGE expanded the program in 2008 adding more than 10 times the amount of renewable energy from wind and solar projects. More than 12,000 customers buy green power from MGE 60% of them choose to buy 100% of their energy from renewable sources. MGE s GPT program historically has been second in the nation among investor-owned utilities for its customer participation rate and for green power sold as a percentage of all electric sales. Some GPT participants asked MGE for options in how they purchase green energy. MGE responded and in 2012 offered customers more flexible choices. Customers now can spend a fixed-dollar amount each month or purchase any percentage of their electric use as green power. Visitors to mge.com can tune in to our Green View web channel to learn about eco-friendly living and steps MGE is taking for a greener tomorrow. Now in its fourth year, Green View covers Green Power Tomorrow customers say... In 2011, MGE customers purchased enough renewable energy to meet the annual energy needs of 20,600 homes. Participating business customers find value in green energy: Purchasing renewable energy from MGE is one strategy we have chosen to help preserve the environment. By opting for green power, we pay a little more, but in turn we reduce harmful air emissions. It feels good to do our part. -- Dr. Eric teduits, Children s Dental Center of Madison Our employees are proud to work for a company that walks the talk not only do we say we support green efforts, but we also actively participate in them. -- George Krug, Ancora Coffee Roasters topics from renewable energy to local businesses committed to sustainability. Clean Power Partners: Some of MGE s retail electric customers participate in MGE s Clean Power Partners program. Customers with solar photovoltaic systems between 1 kilowatt (kw) and 10 kw sell the solar power they generate to MGE. It is then rolled into MGE s green pricing program and purchased by customers who want to support renewable energy and reduce their environmental impacts. The Clean Power Partners program reached the 1-megawatt cap and is now closed to new participants. However, customers can participate in MGE s net metering program. This allows customers to receive credit on their MGE utility bills for the electricity they produce from their renewable energy system photovoltaic, wind or biomass. We exceed the current renewable energy portfolio standard requirements and already surpass the 2015 requirement set by the State of Wisconsin. Conservation efforts MGE believes encouraging customers to conserve energy is key to building a sustainable future. We have a long history of working with customers to help them make wise energy decisions. 16

17 Since 1987, our customers have saved more than 110 megawatts of electricity and more than 50,000 therms of natural gas through conservation. Power Tomorrow workshops: MGE s Power Tomorrow workshops have effectively reached residential customers with conservation education over the past seven years. They focus on energy efficiency and provide an opportunity for participants to learn from MGE experts. Participants have commented: I liked the practical suggestions of things I can do to reduce my energy usage. It is nice to see a power company working toward more energy-efficient ways of living. Working with businesses: Managing energy use affects the bottom line, and that is important to businesses. From training opportunities to providing construction advice, MGE reaches out to businesses to help them use energy efficiently. For example, MGE: Has certified professionals to help businesses learn about energy efficiency and green building techniques. Offers onsite energy assessments tailored to individual companies and their budgets. Holds meetings for major customers to help them stay current and well-informed on energy issues. MGE works with youth organizations to educate the next generation about energy sources and new technology, such as plug-in electric vehicles. Connecting customers At MGE, we believe in the power of working together. We connect our customers with programs to help them live and work more efficiently and sustainably. Green Madison: Green Madison is an energy efficiency program that offers home and business owners in the city of Madison incentives and lowinterest financing to make buildings more energy efficient. The program is funded by a U.S. Department of Energy grant. MGE partners with Green Madison to connect eligible customers to the program. Focus on Energy: Focus on Energy is a statewide energy efficiency and renewable resource program funded by Wisconsin s investor-owned energy utilities, including MGE. MGE partners with Focus on Energy to bring energy-saving resources and incentives to customers. The program offers financial incentives to help customers implement energy projects. EnAct: MGE is a founder and continuing sponsor of EnAct. This local program helps consumers live greener, more sustainable lives. Although individuals can complete the program on their own, most choose to participate on neighborhood or workplace teams. Since EnAct began in 2003, the average annual savings per EnAct household is: 1.5 fewer tons of CO2 emitted, 12,500 less gallons of water used, 196 fewer pounds of garbage created, 1,400 less miles driven and $346 saved. 17

18 Serving our communities As a community energy company, we work hard to stay connected and make a difference in the areas we serve. MGE has a history of innovative initiatives and partnerships that contribute to the long-term health and vitality of our community. Aldo Leopold Nature Center Educating the next generation of energy consumers is an important part of our role as a community energy company. Recently, we partnered on the 2012 expansion at the Aldo Leopold Nature Center in Monona. Visitors to MGE s interactive energy display at the Aldo Leopold Nature Center have an opportunity to learn about renewable energy projects. The center s new addition provides innovative and interactive educational opportunities that help visitors learn about climate change. Inside, MGE s interactive Renewable Energy Education Center teaches children about renewable energy sources wind, sun and local landfill gas. Outside, on the center s roof, we have installed our largest solar energy installation to date. That clean energy goes into the grid to help power our community. MGE also has an electric vehicle charging station in the center s parking lot. CNG fueling station MGE is installing a compressed natural gas (CNG) fueling station for public use at a Speedway LLC convenience store in Monona. This pilot project is the first of its kind for MGE and south-central Wisconsin. It is an innovative way to serve customers and help the local economy. CNG is an economic alternative fuel for local businesses with vehicles that are on the road daily. CNG offers comparable performance to gasoline or diesel fuel but typically costs 40% to 50% less. It also produces significantly fewer emissions, especially particulate matter, nitrogen oxides and volatile organic compounds. With most natural gas produced in North America, CNG also reduces the country s dependence on foreign oil. MGE has used CNG as fuel for fleet vehicles since MGE s CNG station will serve as a critical refueling link for CNG vehicles traveling the Midwest corridor Chicago, Milwaukee and the Twin Cities. MGE received a grant from the State of Wisconsin and federal Department of Energy to help pay for the station. MGE will distribute the CNG to Speedway, and Speedway will handle all sales transactions with the public. Prairie restoration MGE participates in a prairie restoration effort with the City of Madison and Wisconsin & Southern Railroad. The project includes establishing plantings along the Capital City Trail and railroad tracks from South Blair Street to South Ingersoll Street in downtown Madison. MGE monitored controlled prairie burns in 2010 and 2011 to help remove undesirable plants and encourage the growth of prairie grasses. In 2011 and 2012, we put weed management practices in place. 18

19 Prairie restoration increases plant diversity, which attracts native, beneficial insects and other wildlife. Increased plant diversity provides more nutrients to the soil. Prairie grasses have deeper root systems, which aid in water infiltration and retention. They also cut down on surface water runoff and erosion. Library partnerships MGE partners with more than 25 libraries to provide materials and programs to help consumers make wise, environmentally friendly decisions and manage their energy bills. MGE-funded resources include: MGE is a community energy company dedicated to improving the environment and quality of life for all of us who live and work here. the Greening Our World collection. and opportunities to save. Collections of books, videos, DVDs and CDs for all ages on energy efficiency and earthfriendly topics, including Portable energy meters consumers can check out to determine appliance energy consumption MGE provides libraries standalone displays and exhibit materials on topics ranging from renewable energy to energy-efficient lighting. Peregrine falcons Since 2009, a pair of peregrine falcons has called the nest box at MGE s Blount Generating Station home. Peregrine falcons are an endangered species in Wisconsin due to pesticide use that began in the 1940s. Manmade nest boxes at power plants have proven to be ideal homes for nesting falcons. More than half the falcons hatched each year in the state come from power plant nests. In 2012, Vern (male) and Frightful (female) returned for a fourth season. In an odd twist, another female also arrived at the nest box. The new female, named In-Trudy, won the territorial turf war and replaced Frightful. In-Trudy laid four eggs in the spring. All four chicks successfully hatched and fledged. MGE s falcon pairs have produced 15 chicks in four years. 19

20 MGE s Green Team Leaders MGE s Green Team Leaders help incorporate our environmental principles across the company. Green Team Leaders include (left to right) Song Ge, Internal Audit; Tim Gleiter, Substations; Jean Stephens, Environmental Compliance in Electric Transmission and Distribution; Laura Coleman, Safety and Environmental Affairs; Matt Van Beek, Materials Management; Jeanne Burns-Frank, Safety and Environmental Affairs; Jeff Marcouiller, Energy Production; Steve Beversdorf, Gas Systems Engineering; and Daryl Hilsendager, Meter and Connection. MGE s Environmental Policy Reduce impacts Exceed compliance Educate employees Improve continuously Communicate and work with others MGE participates in the top level of Green Tier, a DNR program for superior environmental performance. Madison Gas and Electric Company PO Box 1231 Madison, WI This report is printed on recycled paper manufactured with wind power.